For further information on ways that we may be able to assist your business as we emerge from lockdown, please email company and commercial specialist, Frank Scott-Ashe, to arrange an initial, informal chat.
A “roadmap” for easing the lockdown restrictions is due to be revealed by the UK Government on 10th May along with separate guidance for 7 different workplace settings (understood to be hotels and restaurants, factories, working in other people’s homes, working outdoors, working in vehicles, shops and offices).
The lockdown can only start to be lifted if the Government’s 5 tests are satisfied beforehand (these include a sustained and consistent fall in the daily death rate and there being sufficient testing capacity and PPE to meet future demand). Also, any such relaxation will be gradual as the Government has indicated that it will want to exercise caution to avoid the risk of a 2nd wave of the pandemic that could overwhelm our healthcare system. It is anticipated that the lifting of the lockdown will be according to:
- type of workplace;
- health; and
Those businesses which need to operate from the workplace or are in an outdoor environment while posing a lower risk of spreading the virus (for example small shops and garden centres) will be allowed to re-open first whereas those businesses/sectors that allow large gatherings of people and/or facilitate the quick transmission of the disease (such as pubs, restaurants, hotels, theatres, cinemas and leisure centres) are expected to re-open last. In addition, office workers will be encouraged to work from home where possible to ease pressure on public transport.
It is clear that, for so long as a vaccine is not widely available (which may not be for another 12 to 18 months), social distancing will continue to play an important part in the way businesses will operate. This means that businesses may face a reduced volume of work or sales where they are unable to diversify, adapt or find opportunities to replace lost turnover. On the other hand, businesses which have closed their doors and/or furloughed their staff during the current downturn, will need to be flexible and have the resources and finances ready to meet demand as the economy picks up as well as the ability to wind down their activities should the lockdown be retightened in the event of a further outbreak.
Also, a new mindset will have taken hold over the last two months as the world has had to adjust to a new way of living, such as:
- The need for a business to be more resilient so that it is better equipped to overcome future crises. Debt reduction and (ideally) a plan to build up cash reserves will become increasing priorities once the present crisis has passed.
- Businesses that have seen their supply chain severely disrupted as a result of relying upon overseas suppliers will have questioned the need to use them in the future and may have sought out alternative suppliers more locally.
- The expense of large office premises may be regarded as superfluous for those businesses that will have adapted to having staff working from home and they will have seen their carbon footprint reduced as climate change has become a more pressing concern.
- The increased use of technology as more business is driven via the internet and meetings are held by video conference with employers being forced to embrace the culture of working remotely (along with flexible hours).
A business will need to consider the following measures to reduce the risk of infection:
- Regular cleaning and disinfecting of the workplace, including communal areas and in particular surfaces, handles, touchpads that are touched frequently.
- Restrictions on the number of people that may be in the workplace at any one time so that social distancing is observed. To achieve this, staff may be encouraged to work flexible hours with different start and finish times and/or to work from home 2 or 3 days a week.
- Staff with client-facing roles, in particular receptionists, may be advised to wear face masks and disposable gloves. Perspex screens might need to be introduced in reception areas to protect staff and members of the public from the risk of exposure.
- Reviewing the layout of open plan offices, with desks/workstations spaced out so that staff are at least 2 metres apart. Cubicles/perspex screens should possibly be considered to partition individual workspaces.
- Where social distancing is not possible, for example in factories or on construction sites, face masks and protective clothing are likely to be required. Also, possibly splitting the workforce into 2 teams (eg a “red” team and “blue” team) working at the premises on alternate days or on different shifts so that any such personal contact is between the same individuals.
- Accommodating the travel needs of staff who will be discouraged from using public transport or disinclined to use it until deemed safe. Only a fraction of the working population that has been relying on commuting by bus or train prior to the lockdown will be able to do so as public transport operators will also be required to apply social distancing measures. Taking advantage of the Government’s cycle to work scheme (a salary sacrifice arrangement) might be an option for some.
- Requiring staff to be tested for the virus and/or to use a contact tracing app. Staff could also be advised to check their temperature before leaving their house or temperature screening could become a requirement before entering the workplace.
- Face to face meetings being kept to a minimum.
While the workplace guidance may indeed form the basis for resuming business, any plan to bring staff back to their place of work will also be shaped by the employer’s legal obligation to ensure the health, safety and welfare of staff, as well as the requirement to comply with health and safety regulations and employment law generally. The following steps should be taken:
- Review the Government’s guidance to employers and businesses on operating safely during the coronavirus outbreak and periodically check for updates. There is sector-specific guidance as well. Guidance is also available on the Health and Safety Executive website.
- Devise and carry out a coronavirus risk assessment of the workplace which is applicable to your business. Employers with 5 or more employees must record the assessment in writing.
- Prepare a safety policy setting out the measures being taken by the employer to keep the workplace free from the virus, as well as what is required of staff in order to keep each other and members of the public safe.
- Prepare a return to work plan factoring in that the furlough scheme is currently due to end on 30 June 2020. The employer will want to take into account that some staff (in particular those who care for elderly or vulnerable relatives or who may themselves have underlying health conditions) will prefer to work from home while others will be keen to return to the workplace. A decision will need to be made as to whether all or some of the furloughed workforce will return and care should be taken so that any such decision is not discriminatory or deemed unfair especially where furloughed staff continue to receive 80% of their usual salary while those returning to work potentially stand to receive their full pay. Advice on the employment law implications as well as any changes to staff employment contracts should be considered and a consultation with individual employees may be needed. The Chartered Institute of Personnel and Development has produced a helpful guide to returning to the workplace.
- Where you are in particular envisaging furloughing staff beyond 30th June, considering offering reduced working hours to returning staff or foresee the risk of having to make redundancies after that date, legal advice should be sought before taking any steps.
- Communicate both the return to work plan and workplace safety policy to staff before they are due to restart. Provide training on both internal procedures with regard to, for example, correct usage and disposal of any PPE (such as face masks and disposable gloves), sharing equipment which is to be avoided unless it has been disinfected and how customer queries and meetings are to be handled.
- In relation to staff working from home, where a remote working policy is not already in place, one should be drawn up especially as this is likely to be applicable for a substantially longer period of time than what might have been originally envisaged. In addition, check that appropriate measures are in place so that the communications and/or use of the internet from home for work purposes are secure, information relating to the business is stored securely and can be retrieved by the employer whenever needed.
Review your insurance policy and check with your insurer or broker whether the business is covered against the risk of COVID-19 spreading in the workplace when staff return. The insurance policy may state that the cover is conditional upon appropriate policies and measures being implemented to safeguard against this eventuality.
The business’s cash flow projections should be regularly reviewed and updated taking into account 2 or possibly 3 scenarios after the lockdown is relaxed, for example where the business does not recover (or allowing for the possibility of subsequent waves of the pandemic), an initial period of operation at reduced capacity as business confidence is gradually restored or where there is an immediate and sustained surge in demand. The following should be factored in:
- Furloughed staff returning to work. With 6 million people furloughed, representing nearly a quarter of British employees, at a potential cost of £39 billion for the period up to 30th June (equalling the budget for the NHS), this scheme will soon have to be scaled back. An announcement will be made next week as to what plans are proposed to wind down the scheme in a “measured way”.
- Where redundancies are envisaged, the potential cost.
- Government cash subsidies being withdrawn and, where Government-backed loans have been obtained, the business taking responsibility for interest payments (at the end of the initial 12 month period). The VAT holiday coming to an end with VAT that would have been payable during this period falling due on 31st March 2021.
- Any possible disruption caused by a hard Brexit with the current arrangement between the UK and the EU due to come to an end on 31st December 2020 [see our earlier article discussing how to plan for a “no-deal” Brexit].
Depending on the business’s potential financial position over the medium term, you may wish to take advantage of any finance under the Government’s CBILS scheme which is currently due to end on 30th September 2020 (this could include for example obtaining an overdraft facility or increasing it as opposed to applying for a loan) or a Bounce Back loan (which is not available if the business is already benefitting from the CBILS scheme). Further details of both may be viewed on the Government website.
The following should be carried out where it has not happened already (taking into account the uncertainty faced by businesses and the wider economy as a whole over the next 12 to 18 months):
- Review any long term contracts with customers and/or suppliers, especially those that might be terminating during this period and/or include a provision that states that they automatically renew or roll over at the end of a fixed-term – you may not want the business to be inadvertently bound by the same terms for an extended period.
- Force majeure – check existing contracts for any force majeure clauses. These are designed to suspend a party’s obligation to perform the contract (and possibly give them the right to terminate after a period of time) where they are unable to fulfil that obligation due to an event outside their control. Where the business is resuming its operations, the force majeure clause which may have come into play depending on the wording, may determine that the party has to complete the performance of the contract. Some thought may need to be given as to the effect of this clause in the event of another wave of the pandemic causing the business to suspend its activities again.
- When preparing/negotiating new contracts – wherever possible, agree terms on the basis that payment is made in advance so that the business is able to shore up liquidity. Avoid long payment periods or, where a customer is insisting on payment of more than 30 days after completing the contract, consider the impact on cash flow if the customer fails to pay. Credit/background checks on customers are advised before agreeing terms on a valuable contract.
- For existing contracts with customers – where amounts are owed by a customer, consider offering a discount to secure prompt payment (especially where the payment is overdue as this may be a sign that the customer is in financial difficulty and facing an uncertain future).
Where you are interested in a review of your existing commercial contracts or wish to discuss what practical steps you may take to prepare your business for after the lockdown, please email company and commercial specialist, Frank Scott-Ashe, to arrange an initial, informal chat.